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Hosted Solutions Can Reduce Mobile Capex by 12% in Latin America

In Latin America, mobile operators estimate that less than 10% of overall Capex is spent on end-user service delivery solutions. The majority of the investments are reportedly allocated to end-user services access platforms, end-user services provisioning and charging and payment solutions. Operators have traditionally opted for owning the platforms and having third-parties host applications (such as video services) on them. Beginning in 2007, operators plan to ramp up investments in solutions related to convergence and IMS, device management, and service creation and determine whether to host or buy these platforms depending on their cost-benefit analysis.

PYRAMID RESEARCH Interviewed mobile operators their new report, Managed Services in Latin America: What It Will Take For MNOs to Make the Jump, it became apparent that applications hosting is generally perceived as a low-risk, high-return endeavor. Operators fully accept that their vendor partners can bring them value through their partnerships with media and content providers. Depending on the operators’ priorities, some may decide to take back control of the applications once they are “market-proven.” Vendors that innovate in the applications arena will remain vital to their operator customers. And don’t overlook the enterprise opportunity; while consumer mobile applications are garnering a lot of attention, operators are more concerned about supporting enterprise customers.

Today, operators have to justify their need for hosted solutions extensively before they can adopt them. Based on what we heard during our conversations with the region’s leading players, we don’t anticipate a significant shift in their approach in the next four years. LATAM’s cumulative hosting investments are projected to reach nearly US$500m between 2007 and 2010, accounting for 10% of overall investments in end-user services, service delivery solutions, and charging and payment solutions.

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